Fisher Investments recaps the biggest market, political and economic news from last week, including US jobless claims, Chinese lending figures and Brexit news.
US economic data were light. August core consumer prices (excluding food and energy) rose 1.7% y/y, slightly higher than estimates. Continuing jobless claims ending the week of August 29 increased higher than expected to 13.4 million though remained far below their April highs. While unemployment figures are still historically elevated, they haven’t held back the market and economic recovery as so many feared. Unsurprising to us given employment numbers are late-lagging indicators while markets look forward to a better economic future ahead. For more, please see our 9/9/2020 commentary, “What August’s Jobs Numbers Say about Depression Comparisons.”
In the eurozone, the third estimate of Q2 2020 GDP contracted 14.7% y/y, less than originally estimated. The European Central Bank (ECB) left interest rates unchanged. In the UK, July industrial and manufacturing production fell 7.8% y/y and 9.4% y/y, respectively, both less than expected. July GDP expanded 6.6% m/m. July imports and exports grew 7.5% m/m and 1.2% m/m, respectively. Brexit headlines resurfaced as UK Prime Minister Boris Johnson introduced legislation aimed at setting a legal framework for trade with the European Union if a trade deal isn’t finalized before the end of the year. Some fear the proposed legislation conflicts with parts of the Withdrawal Agreement agreed to last year—resurrecting no-deal Brexit concerns. In our view, these renewed fears aren’t much different from what investors have been dealing with for over four years now and, though some uncertainty remains, the risk of Brexit driving a market or economic disaster after 2020 ends seems exceedingly unlikely. For more, please see our 9/9/2020 commentary, “Today in Brexit, Day 1,538.”
In Japan, the second estimate of Q2 2020 GDP was unchanged from the initial reading of -9.9% y/y. August bank lending rose 6.7% y/y. In China, August aggregate bank lending to business and consumers increased 12.8% y/y. August imports fell 2.1% y/y, missing estimates, while exports rose 9.5% y/y, beating expectations. August consumer prices rose 2.4% y/y, in line with forecasts.
The Week Ahead
The US releases August industrial and manufacturing production data. The UK announces August consumer price figures while the eurozone reports July industrial production. The US, UK and China release August retail sales numbers. Japan reports July industrial production and retail sales numbers and August trade data. The Federal Reserve meets to set monetary policy.
Source for all data cited is FactSet. This update constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. In addition, no assurances are made regarding the accuracy of any forecast made herein. Global equities are represented by the MSCI World Index. The MSCI World Index measures the performance of selected stocks in 23 developed countries and is presented net of dividend withholding taxes and uses the maximum rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.